Despite recent political uncertainty for U.S. renewables, most recently regarding tariffs on key producing countries which look set to aggravate long-term supply challenges in the industry, U.S. solar broke records for deployment last year. According to a report published by SEIA and Wood Mackenzie, 50 GW of fresh capacity was installed in the U.S. in 2024, achieving the largest single year of growth that any energy class has experienced in more than 20 years.
There is now over 219 GW of installed solar capacity in the U.S. Of the 25 largest sites, 12 were built in the last three years, and 20 or more deliver over 500 MW in output. To give a sense of the scale of recent project designs, Terra-Gen’s 864MW Edwards & Sanborn solar-plus- storage project covers four miles from one end to the other and is comprised of 1.9 million solar modules.
Large-scale projects like these are capitalizing on economies of scale, using land reserved for development more efficiently and also improving leverage for owner operators when it comes to contractual negotiations. At the same time, such projects present unique risks to developers and insurers – risks that are magnified by the vast scale of these assets.
To sustainably develop large-scale solar in the U.S., the industry must proactively address these risks and protect the significant investments and the clean energy output that these assets represent.
PV module obsolescence & management
Solar technology has undergone remarkable innovation. Steps to increase the robustness of module designs and to improve cell efficiencies, tracker capabilities, and other factors are the result of a fast-evolving industry. Today, the average efficiency of solar modules is 21% which is 30% higher than the average efficiency in 2015.
This is undoubtedly positive, but the pace of change comes at a cost: technology quickly becomes obsolete. Just as the buyer moves on to a new module, so the manufacturer closes the production run of an old module. So long as an owner can stay loss-free or keep a good stock of replacement panels in storage this might not be a problem.
In the event of a loss, however, we have seen Insureds who are unable to replace panels that were newly manufactured designs just three years beforehand. As the industry shifts toward larger capacity solar modules, even a two-year period could be sufficient time for technology to become unavailable. Since projects are built to meet the obligations of a 20+ year period, the speed at which technology moves on is an ever-present issue when it comes to losses.
Loss auditing challenges
Even before thinking about replacing lost assets, owner operators must work out where the damage is and the quantity of damage that must be redressed. The larger the plant is, the longer it takes to assess damage, extending the business downtime of impacted assets.
Developers have different options available to them to audit the extent of a loss. As well as inspecting on foot, it is possible to carry out electroluminescence testing using drones. While it is cheaper to inspect on foot, it is increasingly impractical to do this on large sites. Conversely, drone inspection quotes for projects with approximately 2 million PV modules can exceed $1.5 million.
Credible cost estimations in the eventuality of a loss event are vital for owners and insurers. For larger projects, though, this is difficult to establish with any reasonable level of accuracy in the early stages of a claim.
It isn’t just damage quantification that can vary widely in expense, but the cost of labor and debris removal in the clean-up too. In some states, panels are classified as hazardous waste, meanwhile lithium batteries are subject to rigorous disposal standards. Consequently, owner operators need to factor in additional debris removal expenses as part of their cost estimations.
The overall cost of losses for large projects is more unpredictable due to their scale. As a result, it is difficult for owners to prepare adequately for the range of cost severity they could face. This unknown has a major impact on potential exposure many months after a loss incident.
Emergence of serial defects
As solar projects exceed 500 MW, their success can depend upon hundreds of inverters. A simple manufacturing flaw can therefore cause major disruption and damage the surrounding infrastructure. If a serial defect in many or all of the inverters manifests on a smaller project, it will be a costly repair job. For bigger projects, the economic and logistical impacts are magnified.
Although serial defect warranties for key components are now common in larger contracts, some suppliers continue to focus their attention only on the components that have shown themselves to be defective, without considering the entire population. Larger sites are more adversely affected by this because it takes longer to diagnose a serial defect across a greater volume of assets, exposing the project to reduced performance for a greater time period.
This is the maintenance challenge that bigger sites face: the planned maintenance schedule is more complex to orchestrate, but the consequences of failing to do so will lead to greater losses. Asset managers must coordinate mechanical item checks, along with vegetation management and site security. Falling short in these areas risks extensive claims, most acutely in the instance of a wildfire – a growing concern for West Coast solar projects.
Grid connection limitations
Reliance on a single point of grid access creates a significant solitary point of failure. In cases where there is a breakdown at the substation or other connecting infrastructure, the result is a probable maximum loss as the inability to export power halts the project’s capacity to generate revenue. The consequent business downtime can be exacerbated by the lead times for step-up transformers, which are generally custom-made for the specific needs of larger sites.
Mitigating outsized risks
In most cases listed above, what catches developers by surprise is not the type of risk they are exposed to, but how these risks scale up unpredictably with project size. These are our recommendations for proactively mitigating outsized risks and establishing a sustainable environment for the development of larger solar farms:
- Insureds should undertake regular feasibility studies to identify what steps they can take if panels must be replaced – this will protect them against the inflated costs of re-manufactured obsolete technology;
- In the event of a loss, insureds should consider ‘reshuffling’: moving all the remaining undamaged modules together and filling the site’s leftover gap with new modules to curb the expense of re-developing the site’s infrastructure for the new modules;
- Insureds should procure and store replacements;
- Insureds should establish an effective disposal plan;
- Insureds should check their serial defect warranty clause to ensure that it includes solving the underlying root cause of asset error;
- Insurers can be more forensic in their appraisal of the maintenance schedules being performed at larger projects;
- Solar projects of significant size should be staffed with multiple GSUs to guard against maximum loss.
According to energy analysts Cleanview, the average capacity of solar projects planned to come online in 2025 is 125MW, double that of 2024, demonstrating that the momentum behind the roll out of solar megaprojects is strong. However, with greater energy generation output comes greater exposure to significant losses, a dynamic that may yet be exacerbated by external factors such as growing Natural Catastrophe events and diminished government support for renewables.
To truly benefit from new economies of scale unlocked by large-scale solar, the industry has to address the outsized risks that come with this and so ensure that these megaprojects are operational for their intended lifespans.
Rosa van Reyk is senior underwriter at GCube, a provider of insurance services for utility-scale renewable energy projects around the globe. van Reyk works closely with developers, owners, brokers and investors to ensure projects achieve relevant insurance solutions in order to manage their financial risk.
The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.
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